Irish people should not be taxed on entry to a new Government scheme to help households get a better return on their savings, an Ibec-led financial services taskforce has said, nor should they be taxed on transaction activity within the scheme.
Ministers were told last week that there will be no capital gains tax (CGT) applied to income earned under the new investment scheme being developed by Minister for Finance Simon Harris.
The scheme is aimed at incentivising Irish savers to move some of the about €170 billion they hold on deposit with banks and credit unions into capital market investments through an investment account.
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In a memo to Cabinet colleagues, the Fine Gael leader said the preferred model being examined for the savings investment accounts (SIAs) scheme is the Swedish system, Investeringssparkonto.
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Under that model, no tax is applied to income or gains arising from investments. A low annual tax is, however, applied to the value of the assets.
In advance of the forum, Financial Services Ireland (FSI), the Ibec group representing the financial services sector, on Monday published the recommendations of its taskforce on savings and investment accounts.
The group – members of which include Revolut Europe chief executive Joe Heneghan, BNY Ireland boss Paul Kilcullen and Goodbody Stockbrokers chief executive Martin Tormey – said no CGT or income tax should apply to income earned from the scheme.
It also recommended that no tax or levy be applied to scheme entrants or on transactions made within the scheme.
FSI said the objective of these recommendations is “to get as many people as possible to invest” in capital markets “via SIAs”.
It said: “Tax incentives are necessary to encourage investment and to make it as simple as possible for new customers.”
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It is understood that the Coalition will consider these and other recommendations made by FSI as part of its overall approach.
The taskforce has also said investors in the SIA scheme should not be required to hold on to their accounts for a minimum period of time.
While it considered the idea, the group said: “It was felt appropriate to allow investors to have access to the funds as they wished. Therefore, on balance, the recommendation of the taskforce is that no minimum holding period would apply.”
Eoin Fitzgerald, the head of Brown Brothers Harriman Ireland and FSI taskforce chairman, said one of the goals of the scheme is to “develop a retail investment culture in Ireland as consumers become more comfortable with owning investment products”, such as stocks, bonds and investment funds.
A spokesman for Harris confirmed the Minister will outline details of the policy rationale and next steps for the initiative at the forum on Tuesday.
The SIA scheme is expected to be put in place in Budget 2027, meaning the accounts will be available from next year.
